Question 2 USF Inc., a firm in the travel business, reported earnings before interest and taxes of $60 million last year, but you have uncovered the following additional items of interest: 1. The firm had operating lease expenses of $50 million last year and has a commitment to make equivalent payments for the next 8 years. 2. The firm reported CAPEX of $30 million and depreciation of $50 million last year. The firm also made two acquisitions one funded with cash for $50 million and another funded with a stock swap for $30 million. The amortization of these acquisitions is already included in the current year's depreciation 3. The total working capital increased from $180 million at the start of the year to $200 million at the end of the year. The firm's cash balance was a significant portion of this working capital and increased from $80 million at the start of the year to $120 million at the end. 4. The tax rate is $40% and the firm's pretax cost of debt is 6.00%. Estimate the Free Cash Flows to the Firm last year. Reminders Adjusted EBIT = EBIT + Current Portion of Lease Expense - Depreciation on Operating Lease Asset Free Cash Flows to the Firm = EBIT*(1- T) + Depreciation & Amortization - Change in Net Working Capital* - CAPEX *Net Working Capital should be defined as Noncash Working Capital as discussed in class